7 Banking Trends to Watch in 2022

Banking has not been immune to the volatile conditions of today’s rapidly changing world. From the COVID-19 pandemic to a rise in artificial intelligence to new cybersecurity threats, banks continue to face large challenges that are ultimately changing the way they operate.

We’ve seen large shifts in 2021, but we expect even bigger changes to the landscape of banking features in 2022.

Here is a preview of what we expect to see from banks in 2022.

7 Banking Trends to Watch For in 2022

No one can tell the future, but we’re constantly analyzing banking trends to predict what’s next. Here’s what’s likely to come in 2022:

1. A Shift in APYs

Following the pandemic, APYs (annual percentage yields) plummeted at both banks and credit unions. Each month, we monitor the best savings accounts and best checking accounts, and a large factor in our methodology is APY.

Pre-pandemic, we were seeing some banks, especially online banks, offering APYs upwards of 2.00%. But when COVID-19 shut down the economy, rates plummeted. And while the economy has been on the mend for a year and a half, APYs have not fully recovered.

Sure, the best online banks often boast that they have APYs 10 times as high as the national average, but when the national average hovers around 0.05%, that’s not too impressive.

In 2022, we expect APYs to continue their gradual return to pre-COVID numbers, but it may take more than another year to reach those historic rates again. And let’s remember we’ve still got a second winter to weather during this pandemic, with a Delta variant that could spell bad news for industries across the board.

2. A Shift in APRs

On the flip side, buying a house will likely get even more expensive so it’s best to take some time to learn how to buy a house. It’s been a seller’s market for more than a year now, with home prices at historic highs. While this seems to be showing signs of slowing as supply increases, borrowers aren’t likely to get better deals from their banks.

Economists are predicting that interest rates on mortgages will start to increase. So while home prices may plateau, the money you’ll pay for those borrowed funds will be on the rise.

3. No Shift in Credit Card Interest Rates

There is one last percentage to watch out for with banks: credit cards. Unlike slowly growing bank account APYs and quickly growing home loan APRs, credit card interest rates are likely to remain steady.

That’s both good and bad: Good because it means interest rates won’t get any higher but bad because these interest rates are already unbelievably high.

At the start of the last quarter of 2021, credit card rates averaged more than 16%. Expect that to remain true into 2022. Understanding how to pay off credit card debt will be as useful next year as it was this year.

4. Elimination of Overdraft Fees

Overdraft fees continue to be one of the most criticized fees assessed by banks, as opponents argue that they are targeted at the poor. Those who live paycheck to paycheck are the ones who are likely to accidentally overdraft (they pay more than 80% of overdraft fees), and the additional fee just makes it more challenging for them to climb out of poverty.

In other words, overdraft fees just make the poor poorer.

In 2020 alone, Americans paid $12.4 billion in overdraft fees. That’s billion. With a B.

But in 2021, Ally Bank, America’s largest digital bank, officially eliminated its overdraft fee. Not to be outdone, Alliant Credit Union followed suit just a couple of months later. Then, in December, Capital One, the nation’s sixth largest bank ditched all overdraft fees, giving up $150 million in annual revenue in the process.

So who’s next? As large brick-and-mortar banks struggle to compete with the advent of online banks, which are leading the charge in dropping overdraft fees, can we expect more of these national bank chains to drop their overdraft fees in 2022? Check out our review for the best online banks of 2021.

Even those banks that choose not to drop their overdraft fees may feel the added pressure to at least alter their policies. Many banks have begun to introduce options like 24-hour grace periods, multiple linked accounts and other solutions to make overdrafting the absolute last resort for customers.

5. Increased AI Offerings

The threat of robots taking jobs has long been a talking point against artificial intelligence, but like it or not, the robots are already here. Experts predict that AI will replace 7% of U.S. jobs by as early as 2025.

But it doesn’t have to be all doom and gloom. Artificial intelligence, when used strategically, can greatly improve the customer experience. In 2022, banks will continue to invest in AI for a wealth of use cases, from increasing security of online banking to more effective customer service via smarter chatbots.

Robots in banking are nothing new. For example, many investors choose to use robo-advisors for their investment portfolios instead of traditional financial advisors.

6. Better Mobile Apps and Digital Banking

But AI is just one part of the customer experience. As Gen Z begins to make up a larger share of banking customers, banks will have no choice but to invest big in their mobile apps and online platforms. Banks that can’t offer a seamless digital customer experience will fall behind.

Some innovations that will continue to grow more popular among banks in 2022 include biometric security, contactless payments and mobile wallets.

7. An Increase in Self-Service Options

The pandemic changed the way we interact with businesses and each other, and even with a majority of Americans vaccinated, there doesn’t seem to be a mad dash to return to normal in every way.

For example, people are still looking for an increasing amount of self-service options.

Banking as an industry is expected to have 203 million digital bankers in the U.S. in 2022 (rising to nearly 217 million by 2025). That means banks will need to continue to invest in better customer service content (more of that AI we were talking about with 24/7 availability), additional ATMs, more automated processes (think loan applications, closing accounts, etc.) and even video banking and interactive teller machines (ITMs).

Choosing the Best Bank in 2022

These massive changes that continue to disrupt the banking industry will make many banks appetizing to customers — and leave many other banks struggling to attract younger customers and hold on to older ones.

If you are reevaluating things during such turbulent times, keep a few things in mind when choosing a bank:

• What’s the APY? Choose a bank that puts your savings account and checking account to work. In 2022, there’s no excuse for putting your funds in an account that doesn’t earn you money.
• What are the fees? Nowadays, there are so many banks with transparent fees. Don’t choose a shady bank with negative reviews about hidden fees. Choose one that is upfront about its fees — and ideally choose one with no fees at all.
• Is a physical location important to you? If you crave in-person interaction, find a bank with a physical bank located near you. That said, consider and online bank. If you can find one with a wide network of ATMs and great over-the-phone customer service, you may find that you don’t miss in-person banking at all.
• What are the ratings of the mobile app? In 2022, digital bankers will represent more than 80% of the U.S. population. If you choose to be a mobile banker, save yourself some frustration by choosing a bank with a highly rated mobile app.
• Are there any bonuses?  When shopping for the best bank promotions, remember that some offer a sign-up bonus for opening a new savings account or checking account. Watch for account bonuses each month and join your preferred bank when the promotion is strong.
• What do you need beyond checking and savings? Money market accounts, certificates of deposit, credit cards, home and auto loans, IRAs, retirement accounts and even insurance: These are all things you can rely on some banks for. Think about your full-suite banking needs (not just a checking account and savings account) and find an option that serves them all in one place.

Here are a few additional resources to help you on your quest:

• Best online banks
• Best checking accounts
• Best savings accounts
• Best banks for students
• Best business checking accounts
• Best robo-advisors
• Tips for choosing a bank
• Best banks for freelancers

Here’s to a 2022 that is full of banking built for the customer. Because, after the last couple of years, we all deserve a break.

Timothy Moore is a managing editor for WDW Magazine and a freelance writer and editor covering topics on personal finance, travel, careers, education, pet care and automotive. He has worked in the field since 2012 with publications such as The Penny Hoarder, Debt.com, Ladders, Glassdoor, Aol and The News Wheel.